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PROFILE Reaching out
IBS Journal talks cloud, compliance, FinTech and the importance of telling a good story with Chris Longden, Avaloq UK Managing Director
Senior Reporter Alex Hamilton
strong financial results last year, the Swiss vendor shipped 35% of its shares to private equity firm Warburg Pincus in a $298 million deal. This has been touted as the first step towards a public listing that would value the company at more than $1 billion. Longden tells IBS Journal that it may have “missed a trick” over the past few years in not being open enough on its successes.
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“The company has an amazing story if you think about the last five years,” he says. “The revenue growth has been tremendous.” The main driver behind that growth has been largely the BPO (business process outsourcing) and services side of the business. Avaloq isn’t an acquisitive company and likes to ensure that growth is entirely organic, even if there have been a few acquisitions here or there.
Cloud and Software-as-a-Service is also a big winner among clients, with many asking Avaloq to provide them services on an outsourced basis. “As long as data isn’t held in the US, people don’t really mind where it is as long as it’s secure,” says Longden. Switzerland’s international reputation helps ease customer worries when it comes to the cloud.
Avaloq’s model has always been to grab a small number of high-value deals, but an expanding client base has ensured that the model has remained an extremely profitable one. There’s more demand for digitisation, with Avaloq now the main digital services provider for a third of its clients. Brexit
valoq has had a busy 2017 so far. On the back of
could potentially have an impact but it’s something that should be studied “as it evolves”. The company has a piece of software, known as SDS, which allows a firm to anonymise client data server- side. This could go some way to alleviating client fears about data control outside of UK borders.
“Our main target market in the UK is the big banks like Coutts and Barclays, all of whom are completely committed to the UK market, so they’re stuck with [Brexit] and will have to see it out,” Longden says. “The only part of our market that could be affected are the global and international European banks who have some decisions to make. I don’t think we’re seeing any of those de-committing to the UK.” More business may move to Paris or Frankfurt, but there probably won’t be a fundamental shift in how things are done.
Around 70% of Avaloq customers operate the vendor’s software on an outsourced basis and the number is increasing. “There’s a real pull from the market. It’s one of the things that has been increasingly talked about in core banking and private banking.” Outsourcing and the use of the cloud, he believes, has been held back by a “lack of maturity” in the technology. Increased adoption is being driven by market demand and firms wanting to leave all the “boring backend stuff” to their software vendors. On top of that there are a number of companies in the industry with “robust” offerings willing to get their feet wet.
“What we’ve looked to do through our BPO centres – we have this concept of ‘global processing’ – is to provide a spectrum. From firms that want us to do just applications management without any
www.ibsintelligence.com © IBS Intelligence 2017
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